Investing in dollars: what you should know in the short and long term

High volatility, marked by global uncertainty, is currently the most important factor on the behavior of the dollar in the local market. There are so many events putting pressure on the exchange rate right now that neither stockbrokers nor the most advanced economists could know what direction the price of the US currency will take in the short, medium and long term.

(Dollar: uncertainty, the factor that influences its volatility).

However, there are fundamentals that can help determine the path on which the foreign currency will move nextand that can be useful for those people who are considering investing or buying dollars, either to travel or do business.

In a Portfolio Live, Juan Eduardo Nates, senior foreign exchange associate at Credicorp Capital, explained that due to volatility, the market is witnessing falls of 500 pesos in three weeks, or rises of 400 pesos in two weeks, ups and downs that are explained by internal and external factors of the economy.

In this regard, the expert recommends to investors that to avoid these pressures, they must be attentive to the ranges in which the currency moves and compare them with what is going to happen next.

(Would it be possible to have a dollar at 4,000 pesos or less?).

Explain that a good investment consists of “buy low and sell high” and to do so, the key is knowing how to analyze the economic context very well.

According to Nantes, at the local level it will be key to be attentive to the results regarding the expectations of the structural reforms, raised by the Petro Government, whether they are approved or they fall.

For the expert, Investors should consider the negative and positive scenarios left by the reform discussions, as well as its implementation period and its fiscal cost.

(Where is the dollar going? Forecasts of what is coming for the currency).

Another key fundamental in the long term will be the decisions that both the Fed and the Banco de la República make regarding interest rates, since this will determine the course of monetary policy.

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